The fund management industry has tended to separate the management of developed and emerging bond portfolios, Lombard Odier said, but it does not think this is necessary any more.
“The rising correlations between bond market performance in emerging and developed markets, together with continuing low yields and the globalisation of trade and financial markets, mean that it makes sense to combine the skills of our teams.
“Given the rapidly-changing dynamics between economies, organisations need to adapt and innovate. We believe this move does just that,” the firm said.
Traditionally developed managers were focused on understanding the economic growth and business cycle dynamics while emerging market managers focused their attention on the identification of idiosyncratic risk in each emerging market.
“Emerging market risks are increasingly driven by developed market cycles,” said Gregor MacIntosh, who leads the new global & emerging fixed income team, “You only have to look at the contagion from the US credit crunch and Europe’s sovereign debt problems. We feel that a division between the developed and emerging markets no longer makes sense for investors.”
The newly-combined team has also hired Salman Ahmed, a strategist who most recently worked as head of global macro at edf trading.
Prior to that Ahmed spent three years at Goldman Sachs International as a global economist.
Lombard Odier’s approach to investing in fixed income applies a fundamental weight-driven beta allocation with the aim of offering investors conservative exposure to local emerging market bonds and currencies.
